Rupiah Strengthens to Rp 10,000 per US Dollar

Jakarta, - The rupiah surged to nearly the level of Rp10,000 per US dollar in the Jakarta interbank spot market here early Friday on a plan to use the local currency in world trading.

The Indonesian currency traded at Rp10,100 -Rp10,110 per US dollar, up 168 points from Rp10,268-Rp10,278 per US dollar at the market's close a day earlier.

The utilization of local currency in the world trading would help keep stability of the rupiah's value, Dr. Muslimin Anwar, economic and banking observer, said here on Friday.

Besides, it could make Indonesia's foreign exchange reserves be diversified so that the exposure of the rupiah against the US greenback would slowly not be too large, he said.

Therefore, the rupiah was expected to continue to climb as investors released the greenback following significant rallies, President Director of Finan Corpindo Nusa Edwin Sinaga, said.

He said the main factor boosting the rupiah to gain was the US dollar's previous rallies which prompted profit taking moves.

Meanwhile, there was no positive issue in the domestic money market, he said.

According to him, the US dollar would be under pressure because the greenback injections in large amount into the US administration to bill out the losses due to the financial crisis. At least two trillion US dollar have been injected, and it could make the US dollar fall.

The rupiah had earlier weakened because it had been affected by the capital market on the regional stock exchanges' losses, he said.

"The weakening of the capital market in the US has affected investors in the Indonesian capital market to withdraw their funds, so that hot money went out from Indonesia. This caused the rupiah to tumble temporarily," he said.

However, he was optimistic that the funds would again flow into Indonesia, as the country was one of Asian countries which enjoyed positive economic growths.

Therefore, the rupiah still had a chance to reach the level of Rp9,500 per US dollar at the end this year.